Unemployment and inequality has “heaped social unrest atop financial turmoil,” spreading uncertainty, volatility and lower market returns that Pimco labeled the New Normal a few years ago.

Flash forward: “Something has changed” as this economic crisis has gone on far too long without a political solution: Instability has morphed into “vicious feedback loops that turned bad economics into bad politics” that’s now recycling, converting “bad politics into even worse economics, further threatening an already tenuous economic future … welcome to the New New Normal.”

The core problem? Washington’s “inability to deal with the aftermath of a huge wave of excessive debt creation and credit entitlement gone crazy … But where politicians … act ponderously, markets don’t. They move at much faster speeds … so as the New Normal morphs into the New New Normal, the economic and financial system risks breakages that the political system will be increasingly incapable of mending rapidly enough.”

Yes, America is sinking into this toxic New, New Normal hell with more and “more political dysfunction and greater sluggishness in economic growth, unacceptably high youth unemployment and long-term joblessness, redoubled debt and deficit concerns, and worsening inequalities between rich and poor.” Normal? No, Abnormal.

New New Abnormal: Neither politician has a real solution

Solution? Can we stop the hemorrhaging before another Great Depression? El-Erian says that the solution depends on what happens after the elections.

But that seems unlikely because, “sadly, neither Obama nor Romney has yet offered a meaningful, forward-looking economic reform program to address problems such as a malfunctioning labor market, unsustainable public finances, a broken credit system, inadequate infrastructure, and a lagging education system.”

Why? Because both Obama and Romney “lack vision and political courage.” And no matter who’s elected their failure of leadership will result in “even greater economic disappointment and financial instability.”

Worse, the longer America’s “economic and political challenges persist, the greater the number of companies and long-term investors that begin to worry, and … act on those fears … hire fewer people … invest less in factories and equipment … sit on the sidelines” leaving America’s fate more and more “in the hands of tactical position players and short-term traders, further ramping up volatility and reducing future growth and job opportunities. And when day traders and company flippers start running a country’s economy, watch out.”

History lesson: New New Normal started back with 2000 dot-com crash

Solution? Pimco’s CEO isn’t hopeful: “Warning bells are ringing, and they are ringing loudly. We’ve already allowed bad economics to lead to bad politics. Now, it’s high time to put a stop to the cycle where bad politics undermines an already fragile economy.”

Unfortunately, the warning bells have been loud since the 2000 dot-com crash that triggered a 30-month recession, $8 trillion in stock market losses, a decade of inflation-adjusted negative returns, and set up to the 2008 bank meltdown.

In short, from 2000 to 2008 we had the Old Normal … then a few years of the New Normal … then we morphed into a deadly dysfunctional New New Abnormal, where bad politics and bad economics are spiraling deeper, driving America into a hell with no exit strategy.

We saw this coming, summarized it a few months before the 2008 Wall Street meltdown when we republished our list of 22 early warning signs: One SEC chairman, two Fed governors, four billionaires, five big-name economists, five big money managers, two financial historians, and many more.

But all the warnings were ignored by conservative ideologues ruling America the past generation, and it’s happening in what we should call the New New New Abnormal.

Here’s our list: Note especially the Bloomberg News report about the new Treasury Secretary Henry Paulson who warned President Bush and his staff in August 2006 — two years before the meltdown — that derivatives could “blow up in Wall Street’s face and affect the whole economy.”

Hustling “The Age of Turbulence,” he admits, “I really didn’t get it until very late.”

Politicians ignore economics, will destroy the economy to win elections. For over a decade America’s been morphing into a series of rapid “vicious feedback loops” that are turning “bad economics into bad politics” then recycling “bad politics into even worse economics, further threatening an already tenuous economic future.”

They want a recession. And most likely the third major Wall Street stock market crash of the century. Welcome to the New New New Abnormal, a repeat of the Old Normal.